New investment fund to bridge money gap for startups

CEO of Icehouse Ventures (Robbie Paul) flanked by Simplicity's Sam Stubbs and FNZC's Matt Blackwell.

Three of the country's leading investment groups have joined forces with The Icehouse to create a new funding vehicle for early-stage high growth companies.

The new partners include investment banking firm FNZC, Sir Stephen Tindall's investment company K1W1 and KiwiSaver provider Simplicity.

Between them they have committed $3 million to help establish Icehouse Ventures, which will take over the previous startup activities of the Icehouse incubator as part of a restructure.

Simplicity has also committed to investing up to $100m of KiwiSaver funds over the next 10 years into funds managed by Icehouse Ventures that go into high growth businesses looking for expansion capital beyond early seed funding.

The new partners will own 23 per cent of the company with the remaining shares held by The Icehouse, which is raising a further $1m for the venture.

Simplicity will start by investing $2 million into the Icehouse's Tuhua II fund, which is 75 per cent subscribed and due to close shortly.

Icehouse chair Chris Quin described the move as a defining moment for New Zealand's startup sector.

"This is a massive boost for entrepreneurs and innovation in this country. Together we are unlocking KiwiSaver and managed New Zealand funds to get more capital flowing into the growth sector to provide more support for New Zealand startups taking on global markets."

New Zealand has long struggled to build depth of venture capital for early-stage investments, but it has been developing with the evolution of outfits such as the Icehouse and Movac.

Quin said this was an opportunity to boost an already fast developing startup market in New Zealand.

"Icehouse Ventures will offer investors unprecedented portfolio-level exposure to New Zealand's boldest start-ups."

Icehouse Ventures chief executive Robbie Paul said providing bigger pools of capital over the next five to ten years was increasingly important as more second and third-time founders started new companies.

Paul says the company's bigger scale would enable startups to attract significantly more capital by tapping into strategic offshore investors and also ensuring a greater portion of the capital they need can be provided by New Zealanders.

"Our goal is to ensure a greater portion of the capital that high growth companies need can be provided by New Zealanders."

FNZC, which is rebranding as Jarden in June, intends to invest across the platform and also release products that provide access to the Icehouse Ventures portfolio of companies.

Chief executive James Lee said the partnership was part of the firm's broader investment into growing New Zealand's capital markets.

Simplicity managing director Sam Stubbs said this was first example of a KiwiSaver fund manager investing in a business dedicated to high growth New Zealand businesses.
He saw it as the beginning of significant investments by KiwiSaver managers into the fast-growing entrepreneurial sector.

Icehouse Ventures will initially employ 8 full-time executives who were previously employed by The Icehouse, which will have a shared services contract with Icehouse Ventures to deliver back office and compliance support.